Post Panama Papers, the call is to name and shame

The public should be able to freely access the names of the people behind the ownership of assets and bank accounts in order to boost transparency and stop secret shell companies being used for criminal activity.

This is the key contention of a host of submissions to Treasury as part of the federal government’s plans to increase transparency of the beneficial ownership of companies following the Panama Papers revelations.

“The Panama Papers and other similar leaks provide a wealth of information on how legal entities created in tax havens are used to commit crimes and launder the proceeds,” said Transparency International Australia (TIA).

TIA supports the creation of a central register to record beneficial ownership information. It said a central register could be maintained by either AUSTRAC or the Australian Securities and Investments Commission (ASIC).

“The only thing that is likely to stop or curtail the misuse of shell companies and other legal structures for criminal activity is the ability for law enforcement, journalists, financial institutions and interested members of the … public to cheaply, or freely, access the names of the people behind the ownership of assets and bank accounts.”

TIA said phoenix companies being incorporated off the back of their failed predecessors could also be tackled.

“There is the need to ensure that illegal phoenix activity is stamped out and a key method of achieving better detection of phoenix activities would be by reliably gathering and sharing information,” the submission said.

TIA has also suggested greater protection and financial rewards for whistleblowers. The Treasury Consultation Paper does not apply to trusts, which are often used for tax avoidance or criminal purposes.

Chartered Accountants’ submission said “an informed discussion about the beneficial ownership of companies cannot occur without some consideration of trusts and other types of legal entities which can appear in a company’s ownership structure”.

“Failure to address this issue in the design … means that the policy intent could be easily frustrated by inserting a trust or other type of opaque entity in the ownership chain.”
The Law Society of NSW wants the register of beneficial owners to be public. It said transparency was crucial as global finance and power became more concentrated.

The Australian Shareholders Association also supports a beneficial ownership register to “help create a global financial system that is transparent and accountable”. It said ASIC should operate the register and be given sufficient funding and resources to carry out this additional responsibility.